If you have a job, you receive your salary through the monthly, bi-weekly or weekly payroll. But do you know what is payroll and how is it calculated? How do you calculate your take-home pay? How do you calculate your payroll deductions? We know, and we’ll show it to you.
Payroll is the process where the employer calculates the wages and distributes it to the employees. The company withholds taxes, CPP and EI contributions from the paycheque, and the remaining amount is paid to the employees.
In Canada there are federal and provincial income taxes paid, while CPP is a contribution to the Canada Pension Plan, and EI is a contribution to the Employment Insurance program.
The federal income tax deduction depends on the level of the annual income, and it ranges between 15% and 33%. The provincial income tax deduction also depends on the annual income, but it has different rates from province to province.
Contributions to the Pension Plan guarantees that the contributor or his/her family will receive a partial replacement of earnings in case of retirement, disability or death. Residents of Quebec are contributing to the Quebec Pension Plan (QPP), while all other Canadian workers are contributing to the Canada Pension Plan (CPP).
The contribution to the Employment Insurance program assures that if you lose your job, you’ll receive a temporary income while you are looking for new employment. The program also provides benefits to workers who take time off due to life events (e.g pregnancy).
Usage of the Payroll Calculator
- Select the year: you can use the calculator to compare your salaries between 2017, 2018 and 2019.
- Select the province: the calculator is updated with the tax rates of all Canadian provinces and territories.
- Enter your pay rate: the amount can be hourly, daily, weekly, monthly or even annual earnings.
- Enter the number of hours worked a week: this is required information only if you selected the hourly salary option.
- Enter the number of pay periods
Please note that the calculator on this site is for informative purposes only and is not intended to replace professional advice.